Gov. Jay Nixon vetoed or froze more than $1.1 billion in spending Tuesday for Missouri's next budget, citing concerns about declining revenues and the potential for new tax breaks to drain state dollars even further.

Nixon's budget cuts include nearly $276 million in line-item vetoes and $846 million in spending restrictions affecting items ranging from public schools and universities to the Medicaid health care program.

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The Democratic governor said his actions were necessary because the budget approved by the Republican-led Legislature was "dangerously out of balance."

"This is economic reality," Nixon said at a news conference.

Missouri's new budget is to take effect July 1.

Nixon's actions mean there will be no funding increase for public school districts, colleges or universities when the new school year begins. But the governor said the education money would be the first to be released if legislators in September sustain his previously announced vetoes of bills granting special tax breaks to a variety of industries and organizations.

Senate Appropriations Committee Chairman Kurt Schaefer said the governor was "holding school kids hostage" to try to get his way on tax policy and, ultimately, to try to persuade the Legislature to expand Medicaid eligibility for low-income adults, which would draw additional federal dollars.

This marks the second straight year that Nixon has used budget restrictions as a means of gaining leverage over lawmakers during the September veto session.

Last year, Nixon froze about $400 million for education, health care and other programs, releasing the money only after the Legislature failed to override his veto of an income tax cut bill. Last year's battle came despite the fact that Missouri revenues had surged above expectations.

This year, Missouri's tax revenues are falling below the projections upon which the budget was based. Schaefer said net general revenues were down 2.3 percent as of Tuesday, with only a week remaining in the fiscal year.

Nixon attributed part of the budget shortfall to erroneous legislative assumptions about tobacco settlement revenues and the Legislature's failure to enact an amnesty program to encourage people with overdue taxes to pay.

The governor said the Republicans' refusal to expand Medicaid eligibility has worsened the state's finances by rejecting a potential influx of billions of federal dollars available under President Barack Obama's health care law. Republicans contend that Medicaid expansion would be too costly for the state in the long term.

Nixon contends the shortfall would be worsened by up to $425 million annually if lawmakers override his vetoes of various tax-law changes, including bills offering sales tax breaks to computer data centers, electric companies, restaurants and fitness centers.

"While eroding our tax base with new loopholes for special interests, the Legislature simultaneously littered the budget with earmarks and new government programs, demonstrating misplaced priorities and a stunning lack of fiscal restraint," Nixon said.

Republican lawmakers have questioned Nixon's figures and defended many of the tax-break bills as mere corrections of tax policies that they say have been wrongly applied by the courts or Nixon's administration.

"The governor's lack of economic policy in the state of Missouri is having a faster and more detrimental effect than anyone realized it would," said Shaefer, R-Columbia.

In addition to freezing funding increases for education, Nixon also put a hold on state employee pay raises, increased tourism promotion, expanded child care subsidies and the restoration of dental and therapy coverage for adult Medicaid recipients that had been eliminated a decade ago. All of those could later be released at Nixon's discretion.

The items vetoed by Nixon include funding for a new economic development office in Israel, pay rate increases for mental health care providers and the acquisition and renovation of a private hospital in Jefferson City to be used as an office building for the state and Lincoln University.

Nixon said he was eliminating 260 full-time state positions and closing 19 regional state offices, including seven for the Department of Revenue and six each for the departments of Mental Health and Natural Resources.